Public Comments on Amending the First Filing Deadline for Affidavits or Declarations of Use or Excusable Nonuse: John P. Murtaugh

Re: Amending the First Filing Deadline for Affidavits or Declarations of Use or Excusable Nonuse

Docket No. PTO-T-2012-0031

I have been practicing patent and trademark law full-time since 1989. About half of my practice is trademark law. I make filings in the US Trademark Office virtually every day; I have obtained hundreds of trademarks and I actively maintain hundreds and hundreds of trademarks. Accordingly, I am very familiar with US trademark practice and the costs associated with maintaining US trademark registrations.

The USPTO is considering amending the first filing deadline for Affidavits or Declarations of Use or Excusable Nonuse under Sections 8 and 71 of the Trademark Act from between the fifth and sixth years after the registration date, or the six-month grace period that follows, to between the third and fourth years after the registration date, or the six-month grace period that follows (77 FR 49425 (August 16, 2012)). In other words, the affidavit deadline would be shortened by two years. This is not a good idea, for the following reasons.

1. The effect of the change would be to significantly increase the costs of maintaining a registered trademark in the United States. Under current procedures, the owner has six years of ownership after registration without having to pay additional costs. Under the proposal, the owner would have only four years of ownership after registration without having to pay additional costs. Assuming that it costs about $1500 (government fees and attorney fees) for a typical applicant to obtain a US registration, amortized over six years of ownership, it costs the owner about $250 for each of the first six years of ownership. Under the PTO's proposal, the $1500 would be amortized over four years, resulting in a cost to the owner of about $375 for each of the first four years of ownership. In other words, the USPTO is proposing to increase the cost of ownership for each of the first four years by 50% ($125 divided by $250). The USPTO is supposed to be encouraging businesses in the United States to register their trademarks, in order to promote industry and commerce. Increasing the cost of ownership 50% for each of the first four years provides a tremendous disincentive, rather than an incentive, to obtain a registered trademark. The cost of ownership of a US trademark registration should be decreased, not increased, for each of the first four years of ownership.

2. "Deadwood" on the trademark register is not a significant concern. It is true that the Trademark Examiner will cite prior registrations against my applications. Many times I investigate whether or not the registration cited against my application is still in use. Most of the time it is still in use. Occasionally it's not in use. When it is not in use, most of the time I can argue over the citation without having to file a petition to have it canceled. It is only in very rare occasions that I am forced to file a petition to cancel a prior registration which is being cited against my application. Accordingly, this "deadwood" on the US register is not a serious impediment to my obtaining registrations for my applicants.

3. I am completely opposed to an amendment to shorten the first filing deadline for Affidavits or Declarations of Use under Sections 8 and 71 as a means of ensuring the accuracy of the US trademark register. First, the US register is pretty accurate as it currently stands. Second, any deadwood which is on the register is not really a problem; it is only in a very rare occasion that a practitioner has to file a petition to cancel some deadwood on the register.

4. Changing the first filing deadline from the sixth year to the fourth-year would foreclose the ability to combine the Declaration of Use filing with the filing of an Affidavit or Declaration of Incontestability under Section 15. Maintaining a trademark portfolio is an expensive, time-consuming endeavor. There is tremendous incentive to minimize the number of times you have to request instructions from the owner. This is particularly true for foreign owners. We want to minimize the number of times we have to inquire from the owner/foreign associate whether or not they want to maintain a US registration. The effect of separating the Section 8 filing from the Section 15 filing is to double the number of times we have to inquire from the owner/foreign associate. Inquiring for instructions from the owner/foreign associate is an expensive proposition. Most of the costs for the Sections 8 and 15 filings are attorneys fees, not government fees. We want to minimize the transactional costs, not maximize them. If the Section 8 and 15 filings are broken up into two filings, the transactional costs are doubled. The current six-year deadline should be maintained, so that we only have to send one inquiry to the owner/foreign associate, that is, asking in a single communication whether they want to make filings under Sections 8 and/or 15. As a practical matter, if the two filings are broken up into separate filings, I predict that many owners will forget about the Section 15 filing, since it is not mandatory.

5. The PTO has stated that registered marks that are not in use result in unnecessary public costs and burdens; the PTO has pointed as an example to costs associated with bringing cancellation proceedings against marks not currently in use. In response, it is pointed out that cancellation proceedings are very rarely brought. Since cancellation proceedings are very rarely brought, this is hardly any burden on the current system.

6. The PTO argues that "recent research indicates that a significantly higher percentage of businesses fail during the first two years after their establishment than during the three years that follow. Thus, use of marks registered by such failed businesses may have ceased long before the first Section 8 or 71 affidavit is currently required to be filed. Therefore, the proposed amendment would help ensure the accuracy of the trademark register by more promptly canceling marks that are not in use." This argument is erroneous for several reasons. First, businesses that are failing during the first two years are typically not obtaining US trademark registrations. US trademark registrations are being obtained by the successful businesses, not by the failing ones. Second, most registered trademarks are owned by businesses that have been in operation more than two years. Typically, a registered trademark is not obtained by a brand-new business; more commonly, this expense is incurred only after a business has been up and running for several years and can afford for this costly intellectual property. Third, the PTO's argument completely ignores registrations obtained by foreign owners based upon a registration the foreign owner has obtained in the foreign owner's home country. This is called a US registration based on Section 44e. Under current law, the foreign owner of a Section 44e US registration is entitled to his US registration for the first six years without having to prove any use in the US. The PTO is now attempting to force this owner to incur the cost of filing a declaration of use after four years, rather than after six years. The USPTO has shown no justification for why foreign owners should be abused in this way. If the USPTO takes away this substantial benefit currently enjoyed by foreign owners, the PTO can expect foreign trademark offices to retaliate in a similar manner by punishing US owners of foreign trademarks in a similar way. In the same way that Section 44e foreign owners don't have to file a declaration of use for six years in the US, also foreign owners of a Madrid Registration, the protection of which has been extended to the US, also don't have to file a declaration of use in the US for the first six years.

For all the foregoing reasons, it is clear that there is no justification for the proposed change. Deadwood on the US register is a very minor problem; cancellation proceedings are very rarely brought, so the proposed change would have little impact on the number of cancellation proceedings brought. The change would require that Section 8 and 15 filings be broken into two filings, rather than being maintained as a single unitary filing under current practice. This would double the amount of work and double the number of filings required to be made, with no benefit. Foreign owners in particular would be punished by this change, since the change would take away the fifth and sixth year of their ownership. The USPTO can expect foreign trademark offices to retaliate by punishing US owners of foreign trademarks in a similar manner.